KARACHI: The Private Power and Infrastructure Board (PPIB) has given a green signal to Hub Power Company Limited (Hubco) to go ahead with its plan to set up a 330-megawatt coal-fired power plant in Thar, Sindh.
“PPIB has issued Letter of Support (LOS) dated December 9, 2016 to Thar Energy Limited (TEL), a wholly owned subsidiary of the Hub Power Company Limited, for developing a 330-megawatt Mine Mouth Power Project at Thar,” Hubco Company Secretary Shamsul Islam said in a notification to the Pakistan Stock Exchange on Tuesday.
“TEL would have to achieve financial close [arrange financing] for the project within nine months,” he added in the notification.
Earlier, the company had estimated the cost of the power project at $550 million.
The development took the company’s share price up 2.20% as the KSE-100 Index closed at a record high. Hubco’s share increased Rs2.50 and closed at Rs116.08 with a volume of 3.1 million shares.
PPIB facilitates investors in establishing private power projects and related infrastructure, executes Implementation Agreement (IA) with project sponsors and issues sovereign guarantees on behalf of the government of Pakistan.
The issuance of the Letter of Support, which is part of regulatory approvals, would help the company find suitable financiers smoothly. The financiers may be including foreign players.
The power project is estimated to start commercial operations in around three and a half years after achieving financial close.
Hubco would take supply of coal from Sindh Engro Coal Mining Company (SECMC), as the power company has stakes in the mining project. The Hub Power Company has injected $20-million equity in the SECMC mining project.
SECMC is estimated to mine 3.8 million tons of coal per annum at around the time when the 330-megawatt power project is to start commercial production.
In addition to this, the power company is also setting up two 660-megawatt imported coal-based power plants worth $1.8 billion in Hub, Balochistan.
The project is being developed by China Power Hub Generation Company (CPHGC) – a joint venture between Hub Power Holdings Limited and China Power International (Pakistan) Investment Limited – a Hong Kong-based company established by China Power International Holdings Limited. Hubco has a 26% stake in the CPHGC project. It has the right to increase its equity to 49% by the commercial operations date.
CPHGC has accepted the upfront tariff announced by Nepra for the coal-based power project.
Published in The Express Tribune, December 14th, 2016.